Investing in hotels can be made in a number of ways. Hotel investment is very popular in the real estate industry because there is more return than with investing in standard real estate – especially when the hotel is popular and full most of the time. Most people choose one of two ways. They either develop a portfolio of investment. This type of investment is normally managed with property valuation software and real estate development software. The reason being, it can get complicated when you have many different investments spread across a number of properties. This type of investment, you don’t actually own any particular property, or even space of a property, you own a percentage. The other type of investment, is when someone purchases a single small property, such as a backpackers or bnb. The smaller, niche accommodation is also popular, and a good way to secure real estate and a business at the same time. In this article, we look at what is important when you are looking to purchase a niche hotel, motel or franchise motel business.

• Stay in the Hotels. If you are interested in any particular business, it is a good idea to stay in it. You are not just buying the building, you are buying the current operations. If you are to be a successful operator, you need to study a business from the point of view of a customer. You will get a very good understanding of the business if you are a customer yourself. You will know what is wrong and right with it.
• Talk to Other Franchise Owners. If you have never owned and operated a franchise, you definitely want to know the experience of others who have. You should talk to other franchisees of the hotel that you are looking at if it is a franchise, and also speak to other people who are in a franchise type business.
• Professional Help. The larger franchised hotels and accommodation chains will have very systematic acquisition processes. They will be very fixed in the way they deal with you. At the same time, it is important you understand your position and the whole process. You need to get help from experienced professionals who know this business, particularly because you have such a high capital investment.
• Research. Research is everything. There are so many aspects of your business you will need to understand before you commit. Just because the franchise is presenting you with certain figures, it does not mean those figures will be true. Local competition could be fierce, or the franchise might not deliver on their promises. You need to have research on everything from the franchise and their operations to the local market and your competitors.
• Negotiation. Even the biggest hotel chains will allow for some flexibility for their agreement with you. If you are discussing a franchise with them, that means they are looking for someone to take over a franchise in a particular area. There are reasons for why they want to do so. You might be the first in that country for them, and it is important you understand what you can use as leverage in your negotiations, for now, and for the future. Negotiation is about getting what is right for now, and the future.

If you have experience in the hospitality industry, and you do believe you can make it work, there are considerable benefits of owning property, working your dream, and doing what you know best.

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I saw an article that mentioned the lenders are moving more aggressively on foreclosures. This can be good and bad for the economy, but this is not a post about a new foreclosure crisis, and how you can profit by becoming a real estate investor. This post is focusing on the seller, and the fact that the seller may find themselves in a new business venture: being a real estate investor. One good aspect of the coming flood of new foreclosures is that we can begin to move this threat to the real estate market off of the books. Foreclosures have the tendency to suppress real estate prices, so sellers cannot always find buyers who are willing to pay their asking price. Foreclosures also mean that there is a great deal of inventory to choose, so builders slow down their production, which also means that sellers have more competition. These two factors concerning foreclosures hit sellers probably the hardest, but there are other factors hurting sellers. In the end, sellers may find themselves waiting for a buyer.
    The problem with waiting is that your life is in limbo, and you cannot afford a house that is just sitting there. I was speaking with a neighbor who is planning on selling his home in the future. He mentioned that our neighborhood is quite desirable. My reply was a hesitant agreement. I pointed out that many of my clients wish to move closer into the city center, since that is where they work. People no longer want a two hour commute to work. They also want to be closer to the activities that they enjoy. I went further with mentioning that for some of my clients there is a desire for space at an affordable price, so they are willing to move farther from the city center. Our neighborhood is outside of the main freeway loop around the city center, and we did not have the grand space at a low price. If you worked in certain locations, our neighborhood was great. We then looked at the houses around his own home. His one neighbor appears to have abandoned their house. The house across the street from his was for sale, then a rental property, then for sale, and now a rental property again (all in the last year). The other house next to his had been on the market for almost a year, but the home is now a rental property. A house slightly down the street from him has been on the market for sale twice in the last few years, but the home is still a rental property. In all of these cases, the sellers can find renters, but they cannot find buyers. My neighbor stated that these sales had problems, which was true, but there is no flawless sale of a home. The sellers had become accidental landlords to avoid having to pay for a home that they were not using.
    What should these sellers expect now that they are landlords? The first problem is now you are running a business. Once you become a landlord/real estate investor, you have to realize that you are running a business. Treat the situation like a business, and you will start to avoid mistakes.Be come familiar with the laws. Keep books on income and expenses. Have contacts. Understand what your tax situation will be. One way to resolve many of these issues is to hire a property manager. The next problem is maintenance. Renters simply do not maintain a home the same way that an owner will. You may be thinking worst case scenario here, but I mean the little things. A leaky faucet does not seem like a big deal. I saw a home where the water from the leaky faucet ran off of the counter down the side of the cabinet onto a wall. The wall has moisture damage with a hole in the wall. These small damages can add up. The solution is to have a home warranty insurance to deal with certain issues, but to maybe also have the property inspected every year.  Another problem can be your renters. If you are not willing to deal with them, you can be setting yourself up for problems. Some problems may be handled when you have a property manager and home warranty insurance, but then you will get the oddball problems. None of the renters can find a key to the house, so they break down the back door (this is why you need the yearly inspection). A crime occurred in the neighborhood, so the renters want a security system installed, but they do not want to pay more in rent. Another renter is angry at his neighbors, and he wants you to become involved in the squabble (whereupon you find out that the origin of the fight is that your renter is a peeping tom). A common situation in this economy is that your renter loses his job, so he cannot afford your price. Do you ask him to leave, and go through the process of finding a new tenant, or do you lower the rent? You may think that you are renting to a stable person, but you never know.
    For every problem, there is a solution. Becoming an accidental landlord may not be a bad thing. This is not an entirely passive income stream, but renting your old home is close to being passive. If you take the time to deal with each situation, make plans, and do your homework, becoming a landlord might be a good thing for your income. What would I do if I found that I might have to rent my home instead of selling? I think that I would talk things over with my accountant first. He would have the tax advice and probably some income advice. I would then talk to my real estate agent about property managers, or I would study up on what I would need to know about managing my home as a rental property. The real estate agent may be qualified to be a property manager, but they may also help you find a renter. I would then look into home warranty companies, finding the one that best suits my needs (this means that you need to read what the insurance covers). If I am not hiring a property manager, I wold check into finding legal rental contracts that would suit my needs. This may mean seeking the advice of a lawyer who specializes in real estate law.  You may not need the help of a lawyer or property manager, but this simply indicates that you should make the time to study the subject before acting. The point here is that there are professionals who can help you become a landlord, or you can go it alone. Good luck.

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It may have taken a while for the real estate industry to get its own software and apps, but the wait has been worth it. New real estate development software is really something special. The lengthy, complex processes of dealing with the business end of real estate in its many forms have finally been digitized and turned into real business systems. Complexity, by definition, is a problem for businesses. Getting from A to B in any administrative or financial process always feels like it takes years, and the trouble for developers and property investorsis that sometimes it can literally take years of man hours.

If you’re a big organization, the last thing you need is more bureaucracy and multiple systems complicating your management of your business. You don’t need multiple reporting systems, to start with, and nor do you need bizarre, costly administrative structures like those a major development can create.

The new software drastically improves business efficiency at the coal face and at the management end, simultaneously. The new software packages are able to streamline processes and create good working systems which are easily manageable at first hand, not at a distance.

This is a short list of the new software types:

• Property valuation software

• Real estate investment software

• Property investment software

• Commercial real estate software

• Development feasibility software

• Development management software

• Corporate consolidation software

• Management and feasibility software for hotels

If your instant reaction to this list was “scalable”, you’re quite right. This is true business software, and it’s customizable for specific businesses. If you’ve seen the brilliant project management software and the very high quality top of the range construction industry project software, this software is up to that standard.

The new approach- Efficient, effective and made to do the job well

The software comes with training, help desk and technical backups, too. It’s true “pedigree” software, with generational support. Add to this the business quality management systems, and you’re looking at excellent, very high value software. This is what the real estate industry has needed for years, a reliable, industry-specific suite of software adapted to its needs.

There are some added benefits. The software creates working methodologies which are effectively built-in best practice. This is a major asset in itself. Like all good management software systems, this software creates a strong single stream management process. Reporting, financials, data and information are all literally on the same page. No more jungles of development data to be laboriously assembled or found, it’s all there where you can get at it. That fact alone saves hours of management time, and it’s a great way of pinning down hard facts in an easily manageable form.

The software also manages the hard-slog work of putting together specific information for development projects. If you’re doing a big commercial accommodation project, the software works very well with the working construction data. You’ve got a clear hierarchy of data on tap, whenever you need it, ready to be turned into a report, used as part of a development application or whatever else you need.

 For data management and functional operational purposes, the new generation of real estate software is the equivalent of the invention of the wheel. Check out what’s available, and you’ll find everything you need.

 real estate development softwarehotels real estate software accommodation property valuation software

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Getting started in the real estate business is exciting and challenging. There are a few things that you should know first before you take this big step. Get as much advice as you can and make sure you have the financial backing. You can also invest in real estate development software
that can help your business run smoothly.

Real estate development software

Get your business equipped will all the right equipment, such as computers, phone systems and other office equipment, and then invest in the right software that will help your business function efficiently. With real estate development software you can work out the value of property and do investment analysis. It is also easy to do spreadsheets and keep track of all your data. You can calculate property purchase and sale values and it will analyse figures for you in regards to tenants and leases for investment properties. It will also track your expenditure, which is a particularly handy tool when you are first starting out as you will need to keep to a strict budget.

Research

Do you research beforehand and know whether there is room for your business within the local area. You don’t want to start up in an area that is already flooded with other real estate agents. There is no reason you can’t start up your business in an area where there are a few other agents, just be aware of who your competition is and budget accordingly for the right amount of advertising that is going to pull work your way.

Costs

Know what all your costs are going to be before you start your business. There will be once off costs when starting as well as ongoing expenses. If you don’t own the property where your office is you will have lease payments once a month and general monthly expenses like utility bills and the cost of running equipment and buying stationary. You will always have advertising costs as you will need to constantly advertise your business. It is likely you will have staff working for you so factor in the cost of wages.

Location

Choose the location of your business carefully. Having your shop front on a main street is the best position for you as you will be on display to more passing traffic. You need to be central to the area that you intend on servicing because you will find that you will be travelling a lot to visit properties for valuations, auctions and when homes are open for inspection. You might want to think about a location that is close to where you live or nearby to public transport. Make sure there is adequate car parking for yourself and your staff as well as your clients. Make it easy for people to choose you in the first place.

Write a business plan

As with any business it is vital that you write a business plan before you start. If you are borrowing money from the bank to start your business it is also highly likely that they will want to see your business plan. A business plan is important to help you plan where you intend your business to be in the future and it can help you stay on track.

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I think people may pick and choose statements from this survey to support their case about the housing market. There are factors that do not look so great, but you can find other factors that bode well for housing. This will lead to various stories about the decline of the American Dream of homeownership in general, about how homeownership is a great investment for the average American, or about how there are signs of a resurgence in homeownership in the future. My thought after skimming the results of the survey is that we need to rethink urban planning, which may be unusual for others to be thinking after looking at this document. There were two factors that I thought would be interesting for the real estate investor to delve into further.
    Americans may not want to own their homes? A rather dramatic statement is being made after the release of the report. The finding was one person out of three felt that renting was a better option. This is a shift away from the idea of homeownership that we have held in the past, and this may be a good thing for the country. It is positive news for the real estate investor looking into rental property. The housing market has been an economic engine for some time, and it will be again, but do we need to be building homes for the end user to buy? Our population will need housing, but they do not need to own that housing, particularly when their own finances cannot help them to meet thepayments (a fact that led to the housing crisis). I see this as an opportunity for the real estate investor. There is a greater market of potential renters who are not looking to become property owners, creating a need for a middle man. Someone has to own the place to live for others to rent. I see a positive mood towards renting as a positive for landlords.
    Hold on, there are signs that owning a home is increasing as a goal that some of our population wants to achieve. If you are looking into flipping houses, there is news in the survey that you should analyze. The idea that owning a home is desired is increasing among certain groups of young people. Most notable a third of young Hispanics want to own a home. Since I am looking at this from the perspective of living in Texas, where the Hispanic population will become a majority, I see this as a factor to consider. Currently, homeownership rates have been low in this community, but this survey has hit upon a trend that I have been noticing. Waiting for my daughter to come out of her elementary school, I hear the mothers talking. I have noticed a few times now that the conversation turns towards purchasing a home. Some people do not seem interested, but you do have a group avidly discussing how they could achieve this goal, and what they want in a home. These conversations are taking place in Spanish.  A real estate investor may be wise to incorporate features that Hispanics are considering for their homes, if they want to flip them faster. This means thinking about including features like more bedrooms and tile floors for one thing (note: although the survey is looking at Hispanics, we have to understand that there are different desires for the home from someone who is of Cuban descent to someone who is of Mexican descent).
    These trends do not come as a surprise. The real estate industry was already seeing the growing influence of the Hispanic market, and we were hoping for this market to blossom, since there are many potential sales there. We were  vaguely aware that some people buying homes should have been renters, and hindsight indicates that this trend may have been in the shadows. There may be a factor that helps us better make a business decision, so at least read this press release about the report. In conclusion, I think that this report highlights that this is a good time to obtain rental properties.

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Looking back at 2010, I am almost want to say that it was the year when the small real estate investor fled the market, but that would not be true. In the past, I had a good deal of activity with real estate investors, many of whom were looking at owning a few properties to create an income stream. Last year that activity declined, but going over my records, I saw that a good 10% of my business was from the small investor. Most businesses have been making predictions on trends for the coming year, and I guess that I decided to look at the market for real estate investment, because my first jobs this year were investment properties. Here is some data for you if you are considering becoming a real estate investor in 2011.
    The trend in the Houston market at the end of 2010 shows signs that may bode well for the investor. Housing prices are going up. This is a mixed bag. On the one hand, a rental property will cost more to purchase. On the other hand, you will not be loosing money by decreasing home values. Most home sales in Houston are at the higher end and lower end of the spectrum. Homes in the mid-value range (think somewhere around $200,000) are not selling well. This places the real estate investor looking for a purchase of a home in this price range in a strong position relative to the seller. Make a good offer, and you can quickly finalize the deal. The number of renters is also increasing. This is great, since you can probably find someone to rent the home to quickly. I have noticed in my own neighborhood that rental properties are finding tenants fast (within two weeks), while homes for sale can be on the market for many months. The interesting trend for the investor is that people are renting condominiums and townhomes in greater numbers. Most condominiums that I inspected last year were close to the Medical Center. Most townhomes were on the edges of downtown. We do seem to have people wanting to be living closer to the city center, rather than the outskirts.
    What kind of problems may you encounter? First is obtaining a mortgage. Lenders are perceived as being too tight with their money. This perception is fairly consistent among many of my clients. I think that you have to expect to have everything in place with your paperwork and credit history if you want to find a good loan. The lesson: go over your finances carefully, before trying to obtain a mortgage. If you try and fail, your credit score will suffer. Second is finding that perfect house/foreclosure. Be prepared to make repairs. Be prepared to have a good sized budget. There are homes which are reasonably priced, and that could require little work in order for them to be turned around for rent, but particularly with a foreclosure, you should understand that work may be needed. Last is dealing with renters. I do not think that renters are being anymore difficult to please than in the past, but they may be taking a closer look at which home do they want to rent. The real problem here is how involved do you want to be. You have to look at this as a business, and realize that you may have to devote more time to overseeing the rental property than what you may have expected. There are methods of making this easier; you have to research them. 
    One trend that the real estate investor may need to consider is the green home. Buyers are becoming more aware of this trend, and they may factor “green home” ideas into their expectations. Does the home have energy efficient features? They may be looking for ways to keep their utility bills down, so they will look for double paned windows or insulation, just as if they were considering buying the home. I guess that what this boils down to is quality. When I talked to renters last year, many acted as if they were buying a home, or that they may wish to buy the home that they were renting. I know that one renter did. I do not think that most renters will end up buying their rental home, but you should be aware that they may be thinking along these lines, so home trends may play a bigger part in their decision making process.
    I mentioned the areas near downtown and the Medical Center as great for renting, but is that it? I live in the Westchase area, and I have encountered quite a few renters in this neighborhood. People are looking for places to live which give them some convenience. Many people now work in Katy or Sugar Land, so they want homes there. (I had quite a few people working at the hospital in Sugar Land). For others, they are looking at schools or quality of life for their family, and again the western side of the greater Houston area proves to be popular. Younger professionals are the ones looking at the areas closer to the heart of our area.
    That is the outlook in brief. The real sticking point I feel will be obtaining the mortgage. Other issues can be worked out by working with a knowledgeable real estate agent. If you do the work right at the start, this may be a simple, reliable stream of income for you.

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I have been thinking a good deal about analytics lately, since I redoing some of my business reports. This set me off to consider what metrics would be important for a real estate investor if he was looking at a market report. I am still formulating some ideas on that topic, but when I heard that foreclosure sales went down, and that this possibly may be due to the poor quality of the housing stock that is left, I decided to write this post to share my thinking on the real estate market for investors.

Understanding real estate data

    You have to understand some things about data in the housing market. One, unlike the web, data cannot be retrieved in real time, so you will find certain market conditions being reported for either January and December around the middle of February. You will never know what is happening at this moment. When you hear comparison numbers, the analysis will be comparing what happened last January to this January. This is actually helpful, but you could be misled if you think the number is comparing January 2010 to December 2009. Two, the data is being presented might be meaningless. For example, more permits are issued than the number of housing starts, and the number of housing starts is greater than the number of completions. You may know 100 permits were pulled for a given area, but that does not mean that the builder will construct 100 homes. Three, data is presented in a way that is useful to the intended audience. A number is a number, and to understand its value, we need a context. That context will be driven by the goals of the people creating the reports. If you have a real estate investor’s association producing reports, you may obtain different bits of data, with different interpretations.

The Houston Real Estate Market for Investors

    When the statement was made that the foreclosure stock (the lifeblood of investors) may not be of the best quality, I was taken aback. I have been inspecting foreclosures that were good choices for investors. However, I gave the topic some thought about what I had seen around town. I also checked some real estate search engines to see what may come up. Over the last six months, I had inspections in neighborhoods or developments where the builder or owner never completed the project, and the homes went into foreclosure. Some of these units were near completion, but others required a good deal of work. When I conducted my search, many of the great deals were partially completed homes. Home buyers had been competing against investors for foreclosures, but home buyers would not purchase these partially complete homes, and most investors would not as well. I could not find anyone who was tracking the number of incomplete builds, but this may be a good value for real estate investors.
    The news also mentioned that housing starts are up. I noticed that construction was increasing on my travels around Houston, so I was not surprised by this number. When I did some checking, I discovered that Texas has the highest number of permits issued for residential construction when compared to the other states (this data comes from the December figures). Will this high number of permits, and the increase of housing starts, mean more new homes on the market (home completions)? This may be good news for real estate investors (less competition for foreclosures) and bad news (competing against new home sales, which bodes better for renting your property). I will take housing starts as good news, because that metric indicates confidence in the economy, which could mean higher returns for investors who manage their holdings well.
    The number of foreclosures does depend on the economy, so how is Texas faring? Here is a tricky topic to observe. We do not know how many homes are going into foreclosure, because the lenders are not going to advertise that number. We also do not know what lays in store for economic growth. The number of foreclosures depends upon the job market. If people are working, and they are earning well, then we will have fewer foreclosures. Texas has done well, but there are storm clouds on the horizon. The EPA could force changes which will cost industry in Texas, which may cause industry to lay off workers. (Debating the merits of the case is not in the scope of this blog; I will say that I applaud the decision by the EPA, but I acknowledge that there may be job loss due to this finding, simply because industry will be scared of the consequences). We also have to worry about what may be happening in other parts of the world. This past recession demonstrated that world markets are more connected than we thought. Actions in Greece or China could have a dramatic effect on our own economy. Didn’t think that a real estate investor in Houston had to worry about what was happening in Greece? My point is that although the economic forecast for Texas is good, we do have some factors to consider which may effect the economy this year.
    Let me go back to the number of pending foreclosures. There is some grounded speculation that lenders held off on foreclosures during the holidays that many homes were going into the foreclosure process. Remember, we will not have these figures for several months, because the foreclosure process can take some time, and reporting will take a bit longer. Most real estate search engines will permit you to search for foreclosures alone, so the fastest way to see a rise in foreclosures may be checking the number of listings on these sites (this will not be entirely accurate, but you can watch the trend). If this number does rise, consumer confidence can suffer, effecting the economy. The one stimulus plan that does not seem to be the focus of complaints is the one for housing through tax credits. This plan has placed many sellers in the position of rushing to have their home on market before the deadline, and many buyers to find homes before the deadline too. However, the program will end. It has helped consumer confidence in this market, but we will have to see what will be happening in the summer months. My guess is that is when we will see more foreclosures on the market (if they are coming).

Real Estate Investor Strategies

What can we glean from this data? If you are looking to sell a property, now is the time. Overall, you may be better to hold the property for next year, so renting is a good option for this year. If you have the funds and ability, you might find that buying partially completed homes could bring you great returns. You will need a good crew to complete the homes, and you will need to evaluate them carefully ( the weather will have caused damage). There are properties in prime locations which can be purchased cheaply. If you are looking for a property which requires little work, that you can turn around to rent or sell, you will have a tougher job. Some investors do not like working with Realtors, because they feel that they can save some money, but this may be the time that you want a Realtor who knows foreclosures as a source. A Realtor will be aware of listings faster than you. Lastly, be ready for the summer. Now matter your strategy or your beliefs about the economy, we will be seeing new data at that time, which can effect how you should act.
    Your real estate investing business is unique. I am providing a generalized summary based upon my own experiences and feelings. I hope that you will take a look at the figures coming out, take the time to understand them, determine their relevance to you, and then develop a plan of action. I have to refine this data. I did not include the performance of REITs  in this report, but that can be a key indicator for insights. The number of permits is a good value to see interest in an area. Housing starts is a good value for builder confidence; however, we did not look at housing completions, which can be a good indicator of economic conditions. Remember treat your real estate investments as a business (meaning evaluate all aspects of what you are doing).

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I am big on looking over reports to find an analysis that will give me insights into my business. This year has found me redoing my reports to better find the trends that I need to watch. Delving into numbers has me thinking about how those around me can find indicators of trends. Some recent experiences highlighted a way that real estate investors may wish to use to see signs that a client may be leaving.
    I come into contact with many renters through my home inspection business. I also meet them on the streets of my neighborhood on my walks. I could always tell that something was going on by observable signs, but how would an investor know when they may not go to the homes that they own? In three instances, I watched carefully as the renters were preparing to leave, and I noticed this trend. Your repair costs will go up, coupled with non-payment of rent. In a fourth instance, the investor’s repair cost went up, but the renter did not default on his rent payments when he was laid off from his job. He is still in the house.
    One reason that was given for non-payment was because of the needed repairs. However, reasons can be mis-leading, so an investor needs more discernable facts. Keep track of repair expenses for each month. If you have a home warranty insurance, ensure that they will give you a report or notification if the renter is calling them directly. If you have a property manager, then ask them to include this data in a monthly report. You should be tracking if they are paying rent. When you notice non-payment, begin checking the repairs column. If this is going up, you can take action.

Suggested strategies when you suspect the renter could be leaving

In most instances which I observe, the renters depart quickly, leaving a confused investor in their wake. With an environment where workers are being laid off, you may wish to contact the renter to create a new more affordable contract for a short time. You may want to put out feelers for possibly new tenants, and see if they will pay your price. The underlying theme here is to know what the going rate for a rental property in your area is. You might be too high.
    Another action would be to inspect the house. Find out what you need to really repair. Do not let the renter make all of the demands; there might be repairs being done that do not need to be done. If your contract requires them to pay the rent, and there is an agreement as to how repair situations will be handled, then you should enforce it. You are running a business, so you should find the balance between being nice and loosing your shirt.
    You may wish to look into selling the house. Depending upon your location, you might find that it is quite desirable. I noticed that a few rental properties in my neighborhood have been purchased (sometimes by the renters themselves). If the repair costs are too much, and you are worried about the renters leaving, then unloading the property might be a solution. You can move onto the next property.
    What strategies might you take? Is there another way for you to know this data? A good way to develop more metrics is to speak to other investors. Maybe by leaving a comment here, you can help someone else.

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Real Estate Investors looking at foreclosures may need to be warier than before when it comes to checking out a home’s electrical system.

I do not know if this is a growing trend among those winterizing foreclosures, or if I am just connecting the dots in a wrong way, but I am finding a trend among some foreclosures that is quite disturbing. The trend is disconnecting the wires from receptacles and switches by one method or another in foreclosures, but whoever is disconnecting these wires has done it in such a way that the house could burn down from an electrical fire.

   I noticed this practice in a specific type of foreclosure. These were homes that had been in the process of being remodeled, but the homes were not completed. In the first case, the wires had been cut behind the walls. Inside the outlet, you would see wires connected to the proper screws. In the next two, the wires had been pulled into the junction box, stripped so they were ready to be attached, and then pushed back into the box. When I had flipped one circuit breaker on, I produced a nice little bang. I noticed a few fixtures came on. Most appeared to have no power though. Using a tester to see if there was power in the wires, I discovered that they were energized. No tape or wire nut had been placed over the exposed ends. This could electrocute someone who was not paying attention. This set up also allowed wires to come in contact, which can cause a fire. I did smell an electrical burning odor  at one point.

    This practice is not a proper way to winterize a home. No electrician  or home inspector is going to check to see if the outlets are wired properly before turning on the power. We look for obvious signs of concern, then we go to the service panel. If everything looks alright in the panel, we turn on the power. I imagine that real estate investors would probably check if lights are working. If they have some knowledge, they might check out the panel before turning on the power. If you are getting pops from the circuit breaker or you are smelling an electrical fire while fixtures are not coming on, you may have this problem.

    I realize that many real estate investors may not use home inspectors, but these cases may be a precautionary tale to either have a home inspector on hand or to be more careful when dealing with a foreclosure.

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